IRMAA is not your great aunt from Milwaukee
If you are collecting Social Security and make more than $ 91,000 as an individual or $ 182,000 as a joint filer (Modified Adjusted Gross Income, defined later) you will have a Medicare withholding increase called IRMAA (Income-related monthly adjustment amount). This increase could be HUNDREDS of dollars per month for a couple. Each IRMMA decision lasts a year and is based on your income two years earlier. So, your income in 2021 will have affected your 2023 Medicare withholdings. This can be appealed in certain circumstances but not broadly if you post retirement income remains high.
Modified adjusted gross income means your adjusted gross income PLUS non- taxable incomes such as tax -exempt interest and the 15% of Social Security benefits not already taxed. A real GOTCHA.
Required Minimum Distributions rules have changed AGAIN
Under the recently passed Omnibus bill the RMDs have been extended the age for the RMD rules of retirement plan distributions. These rules state that those who reach age 72 after December 31, 2022 and age 73 before January 1, 2033 will have an RMD age of 73. Those born later would be 74 and eventually 75. I feel this is for two reasons. 1. The market crash in 2022. This will allow another year or two to recover that value. 2. They need the Boomers to stay in the workforce and pay their wage taxes (and Social Security/Medicare taxes longer, deferring the ultimate retirement date.
Hurricane Ian extension ends this month
February 15th is the filing deadline for 2021 tax returns extended due to Hurricane Ian relief granted last fall. Interest continues to run until payment is made in full, as usual. Don’t forget if you have actual hurricane related damage or uncovered insurance losses, they will be deductible on your 2022 returns. Our firm sincerely wishes no more of these type extensions. They have created a three-year tax season for us, since 2020, stressing our people and systems to their limits.
New IRS hires
Everyone has been talking about the “87,000 new IRS agents” being hired under the (so-called) Inflation Reduction Act. First of all at least half of these hires, if they can find them, will just replace retiring employees over the next few years (see the RMD theories above). IF they expand the workforce and not increase their 1960s technology nothing will happen except maybe it won’t take 6 months for a letter to be answered or 6 hours to get someone on the phone. I think most professionals would agree with this assessment. However, if they are smart enough to expand their technology, especially artificial intelligence, we will see an increase in enforcement that will curl your hair. How would you like to start defending your auto expenses or business meals again? Just an FYI